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CHIP Home Income Plan for Canadian Seniors
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Age 55 or older
Up to 55% of the home value
Tax-free cash
No Monthly Payments
Reverse Mortgages
Reverse mortgages are becoming a popular financial tool with Canadians aged 55 and older. Unfortunately for many, they have not been able to save as much as they would have liked for their retirement. So, in order to live the lifestyle that they would like, they need a little extra help.
What can a reverse mortgage do for you?
A reverse mortgage works by using the equity in your home to provide you with a lump sum of cash or regular income payments. It is a tax-free loan that you do not have to pay back until you either move out of your home or die. Of course, you may pay it back sooner if you choose, but it is not required and there is no pressure to do so.
If you get a reverse mortgage, you will still own your home and government payments such as OAS and GIS will not be affected.
How you use the money from your reverse mortgage is up to you. Some people use it to pay off debt or for daily living expenses while others use it for more extravagant purposes like finally getting that new car or going on that trip they’ve always dreamed of.
How a reverse mortgage works
A reverse mortgage allows you to receive up to 55% of the value of your home in cash. Payment can be as a lump sum, regular income payments or a combination of these. The amount you qualify for will also be dependent on other factors such as age. Usually, the older you are, the more you will be able to get.
While you are not required to pay back a reverse mortgage while you are living in your home, it must be paid back at time of death. Your estate will therefore have to pay back the principal with interest before any other beneficiaries can collect from your estate.
Is a reverse mortgage right for you?
There are many benefits to having a reverse mortgage but it is important to understand the details before making your decision. For example, in order to qualify, there are some upfront expenses such as legal fees and appraisal fees.
A member of the Matrix Mortgage Global team can sit down with you and help you understand these and other details to help you determine whether a reverse mortgage is the right option for you.
Call Instant Mortgage Approvals today
If you would like to learn more about reverse mortgages or any of our other mortgage solutions, contact Matrix Mortgage Global today for a free consultation.
FAQs
Will the homeowner owe more than the house is worth?
The homeowner keeps all the equity remaining in the home.
Conservative lending practices allow homeowners to take a maximum of 55% (33% on average) of the home’s appraised value. In fact, 99% of people who have a reverse mortgage have equity remaining in the home when the loan is repaid.
The equity remaining depends on the amount borrowed, the value of the home, and the amount of time that’s passed since the reverse mortgage was taken out.
Will the bank own the home?
No. The homeowner retains title and maintains ownership of the home. As long as property taxes and insurance are in good standing, the property remains in good condition, and the homeowner is living in the home, the loan won’t be called even if the house decreases in value. Reverse mortgages provide peace-of-mind that the homeowner can stay in their home as long as they’d like.
What if the homeowner has an existing mortgage?
Many of our clients use a reverse mortgage to pay off their existing mortgage and debts, freeing up cash flow for other things.
Should reverse mortgages only be considered as a loan of last resort?
No. Many financial professionals recommend a reverse mortgage because it’s a great way to provide financial flexibility. Since it’s tax-free money, it allows retirement savings to last longer and provides a low-risk alternative to selling and downsizing or taking out a conventional mortgage or a line of credit.
How do I receive the money?
You can choose how you want to receive the money. You have the option of receiving all the money you’re eligible for in one lump sum advance, or you can take some now and more later, or you can receive planned advances over a set period of time.
What fees are associated with a reverse mortgage?
There are one time fees to arrange a reverse mortgage such as an appraisal fee, fee for independent legal advice as well as our fee for administration, title insurance, and registration.
With the exception of the appraisal fee, these fees are paid for with the funding dollars.
What if the homeowner can’t afford payments?
There are no monthly payments required as long as the homeowner is living in the home.
What happens to a spouse if the homeowner passes away?
Surviving spouses can choose to remain in the home without having to make a payment unless they choose to sell the home.
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